The 10% Test

Related link: http://wwwpub.utdallas.edu/~liebowit/knowledge_goods/records.pdf

Stories on filesharing in the salaried press usually mention a drop in recorded music sales during 2001. The size of the drop, though, varies wildly. I have seen numbers as low as 2% and as high as 10%. Record Sales, MP3 Downloads, and the Annihilation Hypothesis by Stan Liebowitz explains the variation:

"In 2001 sales fell by 2%, 4%, 7%, or 10%, depending on which classification one chooses as the basis for comparisons. CD revenues fell the least, total units fell the most. It is not surprising that the RIAA chose total units as the measurement trumpeted in its headlines, experiencing about a ten percent drop in sales that year, since that is a far more impressive a drop than the two percent fall in CD revenues."

Cassettes and singles were in a well-documented death spiral before Napster came along. The 7% and 10% numbers are padded by including cassette sales and singles. If you stick to album-length CDs, revenues fell 2% and units fell 4%.

It bothers me to see that 10% number in a story.

Salaried reporters have a conflict of interest whenever they talk about the upheaval in intellectual property, since they are in a content industry. A conflict of interest isn't the same as corruption -- I also make my living on intellectual property -- but it does mean that reporters need to question their own motives. At the least they have to be skeptical about RIAA press releases when the facts seem to be slanted.

Most likely reporters who use the ten percent figure do it because they are pressed for time, not because they have an agenda. But that doesn't make the situation any better, since a reporter who doesn't understand the 10% number should not be using it.

Either way, a story which puts MP3s in the context of a 7-10% drop in the music industry during 2001 has no credibility. You know instantly that the reporter is clueless.